Clerical Medical

Financial repression, an excellent investment for women, bending over backwards and grapefruit marmalade.

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Back in 2022 financial historian Professor Russell Napier appeared on the Hidden Forces podcast. Now, with the benefit of hindsight, It’s well worth a listen. Specifically because he explains how ‘financial repression’ works. In essence global governments are so indebted he explains that they need to inflate away their debt however they can while simultaneously encouraging people to buy and hold government paper.

The tricks they use include mandates for pension funds to allocate a certain proportion of their assets to government bonds for all manner of reasons like “safety” to ensure that there is no late stage collapse in pension fund values. It also helps if you have a compliant financial press continually shilling high interest rate accounts (which are essentially financed by government bonds) and magazines like Barron’s saying “Time to Buy”.

Here’s a short story about financial repression from the UK this week which was featured in a national newspaper:

David Norton has always been reassured that he is on track for a happy retirement when he checks his annual pension statement. But when this year's statement arrived in the post from his pension company Aegon in February he was horrified. More than £75,000 had been wiped off the value of his pot in one year, sending it plummeting by 30 per cent. 

One year away from retirement, a fall of this scale put David's well-laid plans in jeopardy. Nervous about his nest egg, the 65-year-old home fittings sales manager has been checking his pension each month ever since. To his horror, it has fallen further. His pension pot, which sat at £252,000 just 18 months ago, has dropped to £163,000 this month.

Why has that happened? He was heavily allocated to bonds because he was so close to retirement. Correctly, in the view of many financial advisors, but bonds have collapsed. It’s not just the fund he is in, across the board the UK’s bond focused funds performed terribly.

The Aviva Pension Pre-retirement Fixed Interest pension fund has lost 33.4 per cent over the past three years. 

The Vanguard LifeStrategy fund, which invests just 20 per cent in stocks, is down 12.7 per cent in that time. 

Meanwhile, Clerical Medical's Retirement Protection Pension, which invests almost exclusively in UK Government bonds, has lost a staggering 52.3 per cent.

It’s surprising to me that more is not made of this. Running a pension fund and calling it the ‘Retirement Protection Pension’ and then losing 52% is appalling. It’s even worse when they did exactly what they said they would and invested in ‘high quality’ A-rated UK government bonds. 

That’s financial repression.

Bitcoin is for women too

Most of our investors are male. Which is a bit of a shame. If we say the unsayable, men tend to be a bit more interested in technology than women and so are likely more inclined to look into bitcoin first. It’s entirely sexist and from our experience also entirely true.

It is also true that Bitcoin is an excellent investment for women. Mostly because it is private, it cannot be seized and there are all sorts of scenarios where that might be incredibly helpful. Its performance speaks for itself too. If you want an asset that is entirely protected from the opinions, whims and reach of others, then you need look no further. 

I mention it here because we are talking about pension funds and superannuation. Verve Super (who we discussed last year) targets women and women’s financial goals. Indeed their fund is multi-award winning as set out on their website.

Verve’s returns are also on their website. 

I’m not here to pour scorn on them. Simply to say that there is a case in portfolios for politically and socially agnostic investments as well. I consider Bitcoin to be one of those investments. Its embedded features, privacy and personal sovereignty are also desirable.

Verve invests (among other criteria) on the basis of what they call a Gender Index. So the more balanced a company, as far as its gender equality, the more Verve allocates. Again, this is a choice people are making with their own money and I wish them well but they do appear to be very heavily invested in Green bonds. There are two and a half pages of the investment document devoted to such investments. One of those investments (on page 14, top right) is ‘The Ontario Teachers Finance Trust Green Bond’. Their noble goals and are laid out here

I would make the point that having invested in Verve, your money is then cared for by their investment committee filter via the Gender Index. In this case it then makes it to the investment committee of the Ontario Teachers. They then apply their own criteria to investments via their own investment committees:

Our investment teams across asset classes evaluate ESG risks and opportunities to help make more informed investment decisions. They work with a central responsible investing team, which provides subject matter expertise and integration tools and frameworks. 

That is an awful lot of admin clients are paying for.

My pitch to women investors is simply this. We want to make as much money as possible for you. We do it by buying the only truly digitally agnostic investment out there. It has no staff and no bias. Beyond that, we do not complicate things further because we consider it is expensive and deleterious to returns to do so.

The women who invested with ListedReserve’s Managed Fund at inception are now +540% in just over 5 years.  Verve investors are +30% over the same time frame, well below the ASX index.

Personally, I think the numbers matter too.

Rates for thee but not for me

In the ordinary course of events the more you would like to borrow, the higher the interest rate. A classic example is when you buy a house. If you cannot find the 10% deposit or more, all sorts of additional charges are levied to make up for the additional risk.

When we look at countries though there is a very strong correlation between high debt/GDP ratios and low interest rates. Japan being the stand out, the UK and the US too. Both now well over 100% of debt to GDP but with the government paying only 4%.

There are many reasons, not least as you move up the curve it is clear political risk rises a lot. Nobody, for example, is bending over backwards to lend to Russia.

There is another possibility too, that is, that the interest rate is artificial. It is a manufactured number and the more in debt a nation becomes the more pretend their interest rate. Japan, a case in point, where the government owns most of the debt and continues to print money to suppress the rate that if it were ever to rise would immediately bankrupt them. 

The situation in the US is the same. There is no conceivable way the USA can afford 5% interest rates for long. The math simply does not work. My suggestion is that all the affectations of the Federal Reserve are exactly that, just pretend and with annual interest payments now topping $1 trillion, America cannot pretend for long. 

Falling all the time

There was surprise at the $5k daily candle bitcoin posted on 23rd October. It illustrates how little we all know about how an asset like this will react to its continually falling inflation rate.

I expected to see a $10k daily move over the last couple of years and I still believe that will happen but it is hard to predict. One of the reasons is nobody really knows how much bitcoin is for sale. Balances of bitcoin on exchanges are dwindling with only 11% of the total supply residing there.

As for the balance, we know that nearly 70% of all bitcoin has not moved for more than 12 months which suggests it is in cold storage.

There is no telling how violently bitcoin might react to the major events of the next year. One of those events we know for sure is happening, the bitcoin halving, should take place in late April 2024.  


Nice FT puff piece on Lagarde this week prior to the EU interest rate decision. It’s exactly half time in her tenure so she was treated to lunch at Frankfurt’s finest by the Financial Times Bureau Chief. It’s a stand out piece of work for its absence of criticism of someone who has failed so dismally. 

The evidence for that failure was laid bare in her press conference last week where European rates were kept on hold.

The euro area economy remains weak. Recent information suggests that manufacturing output has continued to fall. Subdued foreign demand and tighter financing conditions are increasingly weighing on investment and consumer spending. The services sector is also weakening further. This is mainly because weaker industrial activity is spilling over to other sectors, the impetus from reopening effects is fading and the impact of higher interest rates is broadening. The economy is likely to remain weak for the remainder of this year.

As it turns out, Lagarde presented our intrepid journalist with a gift!

Taking off her black leather gloves before shaking hands — there’s a slight chill on this overcast day in Frankfurt — she explains: “It is marmalade I made with grapefruits from our garden in Corsica.”

Marmalade I made with grapefruits from our garden in Corsica. 

Further information

Read our bitcoin news wrap-up on Livewire: Bitcoin news you didn’t see in the Fin Review

Our October 2023 report to investors can be found here.

If you are considering an investment in the Managed Fund, you can now apply using our online application form: